Ben and Sam Etskovitz wake up at 5 a.m., hit the gym, and get to the office by 7. Cold calls take up most business hours, then after 5 p.m., they underwrite deals, sort out issues for clients, answer emails, and handle anything else that comes their way.
Their routines could be that of many real estate professionals, but the brothers' business is centered around the business of car wash real estate, one of dozens of specialty niches that have grown in importance among investors as other sectors have settled in for a bumpier ride of late.
Courtesy of Ben Etskovitz
Sam and Ben Etskovitz, the leaders of the Etsky Car Wash Team at Colliers Houston.
Ben and Sam, along with Mason Rabel and Zack Martin, are members of the Etsky Car Wash Team, which moved in January to Colliers’ Houston office from Marcus & Millichap.
Specialty teams and experts like the Etskovitzes exist at firms throughout the country, trusted by auto dealers, car wash owners, semiconductor manufacturers, and others who own or operate real estate that does not fit nicely into the typical office, industrial, retail, or multifamily categories.
They understand the zoning, laws, taxes, and ordinances that apply to each specialty real estate, enabling professionals in their respective industries to be more knowledgeable about their portfolios and transactions.
“We always look for industries that other people aren't in, or like the ‘dirty industries,’” Sam said. “Hence why we got into car washing because not a lot of other people do.”
Niche realty experts tend to have big slices of small pies in specialties that are rising in prominence as the commercial real estate industry's more notable sectors, particularly office, falter in an uncertain economy.
From golf properties to equestrian facilities and even salad farms, the less explored corners of real estate have garnered growing interest from institutional investors, according to the Urban Land Institute's 2023 Emerging Trends in Real Estate report, which predicted 2023 would be the year niche property types came into their own. Five of the six property types top-rated as “investment prospects” are considered niche, including workforce housing, data centers, life sciences facilities, medical offices, and single-family rental housing, the report shows.
Other areas of the specialty sector advertising, casino, communications, data center, energy infrastructure, land, and timber real estate accounted for the largest share of capital raised by REITs in Q1 2023 at $7.31B, according to S&P Global.
Ben, Sam, and other specialized realty experts told Bisnow that making it in an exclusively niche segment of commercial real estate takes extra tenacity, expertise, and commitment. It also takes vision.
The Etskovitz brothers have always been entrepreneurs at heart. A few years ago, in their early 20s, Ben and Sam are now 27 and 28, respectively they were flipping houses and working in the steel business, but wanted to find something more lucrative.
“We couldn’t afford to not make money,” Ben said. “We needed to find a niche within the entire landscape of commercial real estate.”
They quickly gravitated to car washes, drawn in by the fragmentation of the industry. Historically, the sector was made up of many mom-and-pop-owned car washes, which attracted private equity and institutional investors. But those fragments are increasingly joining together as larger car wash companies, like Quick Quack, buy more locations.
Enter the Etskovitz brothers.
“We knew that the industry was poised for disruption,” Ben said of the appeal.
Those going into niche real estate have few sources to call on for advice, he added. And because the team does also handles mergers and acquisitions, they had to learn both the business and real estate sides.
“You need to be resourceful, and you've gotta figure it out,” he said.
Jodi Meade learned that lesson as the principal and director of the Automotive Properties Group at Avison Young, where her “bread and butter” is buying, selling, and leasing car dealerships.
Meade, who is based in Los Angeles, found herself in a similar position to the Etskovitz brothers 20 years ago. She joined CBRE in 1995 and worked in retail investment until a receiver in a bankruptcy court asked her to value a car dealership.
More auto dealership opportunities fell in her lap, and as a self-described “car nut,” she was easily tempted by the idea of making that her full-time career.
“I was reaching out to all these people within our large network at CBRE, trying to find people that I thought had more information, knowledge, and experience than I on this, and I realized that no one did,” Meade said. “And I thought, ‘Well, this might be a pretty cool niche.’”
Meade had no one with the specific knowledge to tap for help early on, though she had inspiration: Her dad was a car enthusiast, while her mom was a shopping center developer back when it was rare to see women in the commercial real estate industry at all.
Even a generation later, it isn’t common for Meade to see other women, especially in the automotive sector.
Courtesy of Jodi Meade
Jodi Meade behind the wheel of the General Lee.
“Some guys would look at me and they would be a little skeptical,” Meade said. “The challenge up front was gender. What does a woman know about automotive?”
A mentor at CBRE taught her how to identify with the mostly male owners of dealerships.
“My mentor, being extremely wise, said, ‘When you walk into a dealer’s office, scan their desk. Read what they read. Go to the conferences they’re going to, because as soon as you start using the terms they live and breathe by every day, those dynamics are going to change,’” Meade said. “So I did.”
Women have come a long way in redefining their role in commercial real estate over the past three decades, she said. In her case, that has entailed understanding automotive real estate's very specific ins and outs, including automotive overlay zones and which restrictions are applicable specifically to auto malls and centers.
“It’s been a long, hard fight to become sort of Queen of Cars, but I wear it proudly," she said. “There is a need to know some of the nuances that are very specific to the auto industry that don’t really translate to other core [CRE] product."
Though much newer to the industry, Sai Thakor found his place at Marcus & Millichap in Houston when he joined in 2021 by focusing on the acquisition and disposition of gas stations and convenience stores. It helps that Thakor speaks five languages, several that many gas station owners also speak, and that on top of his degree in finance and marketing, he has a mastery in negotiation certification from Harvard Business School.
“I saw a product type that a lot of people weren’t concentrating on,” Thakor said. “Overall, it’s a unique market.”
People will always need gas and convenience store items, he said, and there are several tax benefits that come with the real estate. Last year, Thakor and his partner, Jacob Luna, closed about $40M in deals.
He said that he expects that number to keep increasing, having created a database with over 1,000 property owners and marketing to Marcus & Millichap's large pool of 1031 buyers.
“It’s picking up just because of how niche it actually is and how different it is from your basic retail,” Thakor said. “My underwriting makes it to where the operator understands the actual value of their property, and what they can trade at."
That need for specialized knowledge is what drew Cushman & Wakefield Senior Director Michael Flynn to rail property. Though his background is in corporate real estate when he began connecting with railroad companies and users, Flynn realized they had specific needs most brokerages weren't equipped to meet.
He now leads Cushman & Wakefield’s rail advisory group, helping railroad companies to identify new sites to purchase, manage projects, value property, and buy, lease, or sell it, as well as helping users find rail-connected sites.
“Depending on the user, rail can be a massive component,” Flynn said. “It can be a driver that’s right up there, or even above, labor. That’s where we come in. That’s what we do.”
If a client needs to find a space that has access to a deep water port and rail, the platform can help find that, he said.
“When I started out my career in real estate, if you had said to me, ‘You’re going to wind up the head of a rail advisory group,’ I would’ve been like, ‘I don’t what?’” Flynn said. “It couldn’t be any more challenging because there are hundreds of railroad companies across the United States."
But, he added it's a challenge he's been happy to rise to: “I’m constantly having to meet new people, which I really love.”
John Leddy, who leads the newly formed semiconductor and manufacturing team at JLL, saw a similar gap that was not being met in his specialty.
“Semiconductor organizations have very unique spaces. They have office, they have warehouse, they have light manufacturing, but they also have clean rooms and labs where a lot of their semiconductors are produced,” said Leddy, now JLL's managing director of technology-based in Charlotte, North Carolina.
As semiconductor groups have come to market "asking a lot of questions,” including how they can reduce costs and enhance their real estate assets, JLL saw an opportunity and a challenge. The semiconductor industry has long been leery of who it picks as partners given its highly specific needs.
“We’ve been working with our clients to help them understand that, to optimize their portfolios,” Leddy said. “Semiconductors are in a very interesting space right now because there is a lot of demand for their product the growth is going to continue to happen. We see an opportunity with our skill set, our team, and our work with them over the last few years to really help them."
Being able to help clients with narrow and specific needs is a theme of niche-focused real estate. Landan Dory, who specializes in 1031 exchanges at Partners Real Estate in Austin, Texas, said the kind of expertise shows in his success rate.
Most brokers do an average of 2.3 1031 exchanges throughout their careers, Dory said. Meanwhile, 1031 exchanges have a 35% failure rate once they are in escrow with an exchange accommodator.
Dory, a senior vice president at Partners, has done more than 40 exchanges in the last four years, he said, after reverse-engineering a platform to strengthen the weak spots that can be found in those exchanges. The division he built now has a 100% 1031 exchange success rate, he said.
“It’s the biggest game on the biggest stage that this kid from Midland, Texas, who grew up and went to school at Baylor, now lives in Austin, Texas, gets to play,” Dory said. “I get to work with multi-millionaires. I have clients who are professional athletes. It’s cool, it’s a lot of fun.”
